The budget, and the reaction to it, are a good test of the extent to which the Howard Government really did transform Australian society. Have Australians become less egalitarian? Do the middle classes have a new sense of entitlement? Has social justice been killed off?

Although the budget was not a serious attempt to choke off the rivers of revenue that flowed into middle-class welfare under Howard, the new Government had a plan to create the impression that that was what it was doing with its big leaks about changes to the Medicare Levy Surcharge, means testing the Family Tax Benefit Part B and raising the tax on luxury cars.

The Government clearly believes there is political mileage in projecting itself as taking back fairness — “a Labor budget” the Treasurer intoned — so they must have had polling and focus group research showing that most Australians felt the Howard Government had gone too far in molly-coddling the wealthiest third of the community.

Last week’s Newspoll results, showing that large majorities favour means-testing, with large minorities favouring it for anyone above quite modest incomes, were a reminder that Howard has been only partially successful in reshaping Australia on the American model. The survey indicated that he had been most successful with those who had grown up under his rule, respondents in their late teens and twenties.

The Coalition’s reaction was inept. Whereas Labor was playing its changes as bringing back fairness, Turnbull and Nelson were turning it into a class issue, ranting about the “politics of envy”.

Swan has outsmarted the Coalition by putting a gap between the optics of the budget and its real impact. He has crafted a budget that has been spun as the return to fairness (Wayne Swan as Robin Hood!) yet its redistributive effects are minuscule and will fall on a tiny minority. And huge amounts of funding continue to flow into superannuation tax concessions, private schools and tax breaks for rich people with children.

The exception is the raising of the threshold for the Medicare Levy Surcharge which provides a few hundred dollars relief for large numbers of households on average incomes. The move was both fair and clever politics.

The hysterical reaction of the private health insurance industry was expected but also revealing. Along with the greenhouse mafia, this lobby group has become the most thuggish in Canberra. It is among industry groups that the Howard Government created the deepest sense of entitlement, and they aren’t going to let go without a fight.

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Peter Fray
Peter Fray
Editor-in-chief of Crikey
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